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I ran across a story in the acclaimed “medical journal”, International Business Times, about how an old PMS medication from the 60s might be an Alzheimer's cure. Considering the source, I don't put a ton of stock in the story but it was interesting enough to look around a little more. That led me first to wikipedia to learn a little more about the drug in question (sounds like it has nasty side effects), which is when I got totally sidetracked:
Mefenamic acid is generic and is available worldwide under many brand names.[5]
In the USA, wholesale price of a week's supply of generic mefenamic acid has been quoted as $426.90 in 2014. Brand-name Ponstel is $571.70.[15] In contrast, in the UK, a weeks supply is £1.66, or £8.17 for branded Ponstan.[16] In the Philippines, 10 tablets of 500 mg generic mefenamic acid cost PHP39.00 (or the equivalent of $0.88USD) as of October 25, 2014.
The numbers in wikipedia may be extreme, but not by much. Looking online, I see that thirty 250mg tablets cost at least $111 at Walmart. In an almost direct reversal of the quantity and price numbers, one hundred 250mg tablets cost $35 from a UK manufacturer, but to get the drug at that price, you must break Federal law.
The rest of my comment would be a long string of expletives which I shall omit.
(Score: 0) by Anonymous Coward on Monday August 15 2016, @02:49AM
And if a manufacturer decides 5% isn't enough of a profit margin so the drug doesn't get produced, what then?
(Score: 0) by Anonymous Coward on Monday August 15 2016, @02:59AM
5% over the prime lending rate is actually a pretty darned decent profit margin. It doesn't sound like much today when the prime lending rate is sub 1%, but, given things like amortisation of assets, comes to quite a tidy amount.
The basic calculation in this case is: do I have something more profitable in which to sink my investment money? Bonds? No. Nothing better than a junk bond will get you anything like 5% over prime. Stocks? ... maybe. If you're lucky. A fancy startup? Odds are you'll lose all your money. Real Estate? The myth of its invulnerability has been thoroughly debunked. It turns pharmaceuticals into a healthy, reliable money-spinner. Give or take some details you can double your money in well under two decades (better than that when you allow for depreciation and related expenses) with strong confidence that the market on your overall production lines is locked in for at least as long as it takes the FDA to approve competing products - i.e. decades.
The willingness of investors to put their money to 5% over prime is not something I'm remotely worried about.
(Score: 1, Informative) by Anonymous Coward on Monday August 15 2016, @03:26AM
Congratulations on avoiding the question, but to answer your reply-
The pharmaceutical industry also has high R&D and approval costs, with numerous failures for every success, so if their successes are going to be limited, shouldn't the failures be subsidized?
5% return isn't in comparison to stocks or bonds, but in relation to other drugs that could be produced. Why bother with a 5% return when those resources could go to a drug that has a 10% return? You may be shocked to learn that there are often drug shortages for this very reason.
And quite a few drugs are loss leaders, as they are required to keep a supply on hand. Do they get a tax write-off for them? How do you calculate the costs under your model?
The willingness of investors to put their money to 5% over prime is not something I'm remotely worried about.
Well then it seems this is a prime opportunity for you to raise capital to produce this drug yourself. I mean sheesh, you should have no problem getting production started and savor those sweet, sweet returns yourself.
Or just maybe the pharmaceutical market is a hell of a lot more complex than you make it out to be.
(Score: 3, Insightful) by Anonymous Coward on Monday August 15 2016, @03:36AM
What are the R&D costs associated with a drug that has been on the market since the 60's ? They have long since recouped those costs and are just profiteering now.
(Score: 3, Informative) by archfeld on Monday August 15 2016, @03:41AM
I go to Mexico and buy medications all the time. I'll check out the cost at the Purple Stores in Algodones next time I head over the border. Most items are available at a fraction of the cost and despite all the publicity I've never had Customs blink when bringing medicines back even when they are proscription, provided you can show a doctors script. There are limits on the quantity but the exact same medications are available the labels are just in Spanish.
For the NSA : Explosives, guns, assassination, conspiracy, primers, detonators, initiators, main charge, nuclear charge
(Score: 0) by Anonymous Coward on Monday August 15 2016, @03:42AM
Well gee, you might have a point if they were no longer involved in any type of R&D since the 60s as well.
Here, let me simplify your argument for you-
"Bad regulation is what got us into this mess."
"Well then obviously we need even more regulation."
I'm done here.
(Score: 0) by Anonymous Coward on Monday August 15 2016, @03:57AM
Lets not forget Martin Shkreli, who raised the cost of a life-saving drug 4,000 percent overnight after buying the rights to the drug.
(Score: 1, Insightful) by Anonymous Coward on Monday August 15 2016, @04:10AM
Pyrimethamine has been available since 1953,[12] and is not subject to any unexpired patent.[13] However, in the United States, the market for this product is sufficiently small that no generic manufacturer has emerged.
Let's not forget the rights to the drug were sold twice before he got it since NO ONE ELSE COULD MAKE A PROFIT ON IT.
And screw you for putting me in the position of defending him.
(Score: 1, Interesting) by Anonymous Coward on Monday August 15 2016, @03:44AM
The whole story was about generic drugs that are being delivered at much higher prices in the USA than elsewhere. These are already approved drugs.
As for R&D and approval costs, there's no reason those can't be counted into capitalisation of a product line the same way that expenses are turned into capitalisation when a hot internet startup buys expensive chairs and other crap then goes public.
I am happy to grant you that people might decide to sell other drugs - and bully for them should they do so - but trying to paint the problems that you're raising as mysteriously insoluble is to ignore the fact that the accounting world has been facing, and solving these problems for centuries. You're proposing that there are costs that, somehow, don't count as costs? Or can't count as costs? Every dirt-covered farmer in the USA deals with that sort of thing, and has for a long time.
The short answer to what you're asking is: supply and demand carries on as before. We just delineate some conduct as problematic with respect to monopoly law, and consequently place some limits on it. Boom, there's your answer. The details around costs that need to be counted - well, that's why almost every community college in the country has at least a basic accounting course or three. If the FDA places a requirement that certain things be produced and warehoused as a condition for other activities, then the costs of doing precisely that constitute a (regulatorily imposed) cost of production.
And as for companies stopping production right now? Yeah, that's a thing, and the problem there is one, nine times out of ten, of over-regulation. Lighten the regulations, ease the system, and let the companies actually function as such. If you want to put the screws to them so much that it hurts, simply say that if your necessary drug is not available on the market, the IP obviously isn't relevant, release it to the public domain and every compounding pharmacy from sea to shining sea can go nuts cranking it out like candy.
(Score: 3, Insightful) by sjames on Monday August 15 2016, @07:06AM
Don't forget, they have to get the drugs approved in the EU as well and they freely choose to do so, even though they won't get more than a fraction of what they can sell for in the U.S. Apparently they still find that profitable enough to do it every time.
(Score: 2) by compro01 on Monday August 15 2016, @09:12PM
Then we say "fuck the market" and set up a Crown Corporation to make it.